In a Nutshell: With home values rising and bank regulations that require a 20% down payment for a mortgage , homeownership in New Zealand is at its lowest point since 1951. NZCU Baywide is a member-owned credit union offering ultra-competitive mortgage options that cover as much as 95% of a home’s purchase price. The difference in down payment can save Kiwis more than $80,000 up front on the median home, which is why NZCU Baywide is our Editor’s Choice™ for Secure, Affordable Personal and Mortgage Loans for New Zealand Families.
I was 19 when I bought my first home. As you can imagine, gaining approval for a mortgage without a cosigner or financial backing at that age wasn’t easy. I viewed buying a home as a solid investment. Plus, getting a head start on building equity in a property would only pay dividends in the long run.
As it turns out, I was right. I lived in my first home for 17 years before selling it and upgrading to a bigger house. The second time around, finding a lender willing to extend a mortgage wasn’t nearly as difficult, thanks to my track record of on-time payments. It also helped that so many options exist in the US for mortgages of all types, and for borrowers of varying credit histories and financial means.
For hard-working families in New Zealand, the dream of homeownership is more difficult to bring to fruition. Regulations from Reserve Bank, New Zealand’s central bank, require a 20% down payment for mortgages at most Tier-1 banks. The median home value in the country is $516,000 NZD ($359,002 USD), with the average home in upscale Auckland $840,000 NZD ($577,221 USD).
A required down payment for the average home in New Zealand is hovering at $103,200 ($71,800 USD). Given that the average salary in the country is around $35,780 NZD, a down payment of 20% is out of reach for many families. Those regulations are partly to blame for New Zealand’s home ownership percentages falling to their lowest point since 1951.
This is an issue that NZCU Baywide aims to alleviate through fair rates and reduced down payments. The New Zealand-owned credit union was established in 1971, and, as a member-owned establishment, has been extending affordable loans to Kiwis for decades.
“In a market where we continue to see a significant rise in house prices, a 20% deposit is becoming more and more unrealistic for many everyday, hard-working families,” said Andrew Quayle, NZCU Baywide’s General Manager Sales, Marketing and Channels. “As a credit union, NZCU Baywide is in the unique position of being able to offer financing of up to 95% of the purchase price. Our low deposit offering, from just 5%, has enabled us to help hundreds of families achieve their goals of owning their own homes.”
Achieve Homeownership without the Burden of 20% Down
Most Kiwis don’t have more than three years of salary laying around in a savings account to dedicate toward a down payment for a house. NZCU Baywide realizes this and offers mortgage solutions that cover as much as 95% of the purchase price of their dream homes. That can mean the difference between owning a home or becoming a lifetime renter.
NZCU Baywide is able to offer this kind of loan because it is a financial co-operative and not a registered bank. While its deposit products still maintain the same insurances and standards as banks, NZCU Baywide is owned by members, and, therefore, is not subject to the same governance that requires larger down payments for mortgage loans.
With a low down payment mortgage loan, your money down at closing could potentially shrink from $103,200 to an affordable $25,800 on a $516,000 home.
“These loans help customers take their first step on the property ladder — an achievement that would otherwise be unobtainable for many,” Andrew said.
Add to that the potential of a weekly repayment schedule to save on interest, and competitive rates starting around 6.0% per annum (the equivalent to APR in the US), and NZCU Baywide’s loans are tailor-made for families who deserve to be handed the keys to their own homes.
Personal Loans from as Low as 8.9%
Although NZCU Baywide’s home loan program is among the strongest in this Australasian nation, the credit union also offers personal loan options that compete with — and in most cases, beat — competitor offerings.
NZCU Baywide extends the same advantages in its personal loan offerings as it does in its affordable mortgages.
“Our home improvement loans are the perfect option for existing and new customers who may not be eligible for financing through their own bank due to a high loan-to-value ratio,” Andrew said. “They are very popular, particularly due to our very competitive personal loan rates — often less than most Tier-1 banks. We offer personal loan terms from six months up to five years, and our minimum loan amount is $2,000.”
These loans are not limited to only home improvement. If you’re looking to purchase a car, go on a vacation, or finance any other large expense, NZCU Baywide offers solutions for as low as 8.9% per annum on secured loans. Unsecured options are available for as low as 11.9% per annum with the same loan terms and minimums.
The difference between the two types of loans deals with collateral offered, with the lower rate on the secured loan coming when customers can offer up something of value, like a home or car, against their defaulting on the loan. Unsecured loans require no collateral, and the higher rates are in place to protect the credit union from losses on defaults.
Explosive Growth Triples Asset Base in 10 Years
With an intense focus on its member-owners and a dedication to serve Kiwis, NZCU Baywide’s asset base has grown exponentially in recent years. It may have taken three decades for the institution to eclipse $100 million in total assets, but in the last decade, it’s jumped to more than $300 million.
Factoring in the global financial crisis earlier this decade, that rate of marked growth is an impressive sign of healthy business.
“We are on a steep growth curve — the last two years in particular following development and implementation of a new growth strategy,” Andrew said. “This growth has enabled us to reinvest into the business — notably the impending deployment of a new core banking system. This provides the infrastructure to develop and deliver future products and services to remain relevant to today’s and tomorrow’s customers.”
The added revenue makes it possible for the nonprofit to offer lower rates and develop new technologies that focus on the security of its banking products. Chief among the upgrades is a move toward the modern Flexcube program created by Oracle and adopted by more than 100 financial institutions globally. The move increases security and adds more online and mobile banking options for members who prefer a digital banking experience. That’s just one of the changes the institution has put in place to provide customers with a better experience.
“Over the past 12 months, we have been recognized for our products and services by Canstar, an independent research provider for the retail and financial services sectors,” Andrew said. “NZCU Baywide was awarded a five-star rating for our Online Saver account, and a five-star outstanding value rating as lenders of secured and unsecured personal loans.”
Extending a Helping Hand to Hard-Working Kiwis
Not everyone is able to buy a house early in life. I was fortunate enough to find someone willing to take a risk on me, despite being only 19, with no cosigner or other financial backing. If I attempted such a feat today, under tighter lending standards, I’d almost certainly be turned away before I got a foot in the door.
Credit unions, like NZCU Baywide, understand the difficulties that come with saving enough money for a steep down payment on a mortgage. It believes that not having three years of earnings on hand doesn’t mean you’re not capable of paying back your loan. Families all over New Zealand are experiencing the same difficulties in obtaining financing for buying homes, as ownership percentages continue to fall alongside a steady rise in home values.
Renting is not only expensive, but it continues to sink money every month into a property that you’re not building equity in. With as little as 5% needed on a low down payment home loan from NZCU Baywide, Kiwi families’ dreams of owning a place of their own are closer than they may think.